Anadarko(APC) is specially prepared for the prospect of $200 oil. Both on the Natural Gas side and on the Oil side. They have international exposure, but with Oil that high, transportation costs will become an issue for the major oil companies. For US domestic usage the Gulf of Mexico is a strong local source. They are drilling deep to develop new fields, and have the best rig inventory lock ups in the Gulf.. In both the Miocene and Lower Tertiary Prospects, they are planning on drilling an additional 10-15 wells for exploration and appraisal. More oil and gas, means more profit On land, they have an equally impressive record. APC has identified 25,000 Lower-risk drill sites identified, and plan to drill 9 to 11k of those wells in the next 5 years. Those are all within Wyoming, Utah and Colorado The Marcellus Shale reserves in Pennsylvania haven't been fully explored or brought on line yet. But, at 200$ and a corresponding higher price for Nat gas, the incentive to bring these new finds up to production is substantially higher. Their breadth of exposure throughout the Gulf of Mexico allows them to tie their infrastructure together for $1bb of savings on pipeline and development costs Further on the Natural Gas side, Anadarko is developing a recently acquired property in the South China Sea. China is obviously a large user of all types of energy, so this will provide more local supply for the whole South east Asian area. In the last 3 years, APC has logged a 50% deep water drilling success rate. This is the highest in the industry. If oil goes to 200, then Deep water consistency will allow them to charge higher fees for drilling and finds. Africa exposure in Ghana is larger than they originally thought. Unlike most oil and gas finds, every time you drill you come up with less oil. Their Ghana find is unique because every time they drill in that area, they find that the area is larger than they thought Anadarko (APC) is also dirty cheap, trading with a forward PE of 12.37. With oil going to $200, the earnings estimates are way too low.

With oil going to $200---who wouldnt want to own XOM?? Foward PE of 8.73

BP Capital’s largest position is Occidental Petroleum (OXY), which trades with a P/E of 8.41, and sports operating margins of 44.16%, which is well north of the Exxon Mobil (XOM)’s 16.45% and the industry average of 29.47%

Barrons had a very positive note this weekend on PBR---They are seating on 3 5 billion barrel feilds. PBR is cheap, trading with a 14 foward P/E

Another, name I like for $200 oil is Ram Energy (RAME)—Ram, which has various oil and natural gas lines in the Barnett share coming online and should benefit as prices continue to move higher Drill is up 100% year over year, showing that management is finally starting to take advantage of the higher oil and natural gas prices and Ram is very cheap vs. its peers based on a Price/Net Asset Value (NAV) ratio, trading at 0.53 vs. The mean average of 1.6x. Management owns a large portion of the company.

Back on December 17th—National Oilwell Varco (NOV), the largest U.S maker of oilfield equipment, agreed to acquire Grant Prideco (GRP) for what was then $7.4 billion in cash and stock; making it the second largest deal in the oil service sector in 2007, second only to the Transocean (RIG) and Global Stana Fe merger. National Oilwell will pay $23.20 in cash and 0.4498 a share for Grant Prideco, equal to $58 a share, or a 22% premium back when National Oilwell made their December offer. However, due to the terms of the agreement this takeover price has vastly changed, thus creating a very interesting opportunity. Since shares of National Oilwell are down 20%, the premium that National Oilwell will be paying Grant Prideco share holders has to be adjusted. In fact, after you make the adjustments National Oilwell will be buying Grant Prideco (GRP) for approxmentaly $51.50 which is about 13% less than the December offer of $58 a share. Despite the natural synergistic ties both companies have, National Oilwell is clearly buying Grant Prideco at a cheap price. Actually, I am quite surprise that shareholders are going to agree to the terms of the deal. For starts, Grant Prideco has very preparatory piping technology that can transmit high-speed data from the wellhead to the surface. This system, will feed more information to drillers and could potential help direct the drill head, thus reducing drilling frequency and cost Anything that relates to deep-water drilling or servicing of those deep-water drills is worth looking at. Take for example Gulfmark Offshort (GLF) which beat analysts EPS by 58 cents per share and as a P/E of 9, or Pride International (PDE) which beat EPS by 22 cents per share. Grant Prideco should also be a huge beneficiary of the $125 billion that Exxon (XOM) plans on spending in new projects over the next 5 years. Exxon (XOM) has a P/E of 11.32 and a PEG ratio of 1.08.

Passport Capital’s, the hedge fund which was up 200% last year, are huge supporters of Pride International (PDE). Pride, which is based sole in the Gulf of Mexico, is finally starting to see pricing power. Pride, is extremely cheap with a forward P/E of 10.94 and a PEG ratio of 0.64

International driller Ensco International (ESV), which trades with a forward P/E of 9.2, despite having the highest margins of any of the deep-water drillers at 65% is cheap vs. its competitors. Ensco has met or exceed analyst estimates since 1999.